Tax and Expenditure Limitations and State and Local Fiscal Structure: An Empirical Assessment

Abstract

The tax and expenditure limitation (TEL) “movement” of the 1970s and 1980s can be characterized in part as a struggle between local autonomy and state control. Undeniable shifts have occurred over the same period in state and local revenue systems and functional responsibilities. This article places these shifts within the context of this movement, using pooled, cross‐sectional, time‐series techniques for the period between 1970 and 1990, in an effort to assess its impacts. Findings suggest that TELs have resulted in increased centralization, lessened local responsiveness, increased use of local non‐tax sources of revenue, and a sector less accommodating to the needs of dependent populations. TELs may have also had dubious effects on both the allocative efficiency and equity of the state and local public sector.